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What’s behind the resilience of US equity prices – market structure, earnings expectations or equity risk premia?

Author

Listed:
  • Grothe, Magdalena
  • Manu, Ana-Simona
  • Tomov, Toma

Abstract

This box explores the resilience of US equity markets since 2023 in spite of monetary policy tightening and persistent geopolitical tensions. Market dynamics have been driven by strong earnings growth expectations linked to advances in artificial intelligence, particularly for the so-called Magnificent Seven stocks, and by buoyant risk appetite. Elevated valuations and the significant stock market concentration make the US equity market vulnerable to adverse shocks, such as disappointing earnings or macroeconomic surprises. JEL Classification: G12, G15, E44

Suggested Citation

  • Grothe, Magdalena & Manu, Ana-Simona & Tomov, Toma, 2025. "What’s behind the resilience of US equity prices – market structure, earnings expectations or equity risk premia?," Economic Bulletin Boxes, European Central Bank, vol. 8.
    • Handle: RePEc:ecb:ecbbox:2025:0008:1
    Note: 1601201
    as

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    More about this item

    Keywords

    AI; equity risk premium; US equity prices;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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